Abstract: Driven by the proposed new circular economy goals and “dual carbon” strategy (carbon peak and carbon neutrality), the inherent recyclability of aluminum and its alloys makes their secondary utilization critical for green and sustainable development. Owing to its controllable source, scrap aluminum produced by manufacturing industries, such as the automobile, aerospace, and electronics industries, represents a high-value resource that will be critical for the global supply of aluminum and its alloys. However, large amounts of impurity elements (Fe, Si, Mg, Cu, and others) are introduced into scrap aluminum during the recycling process, among which Fe is the most harmful. Consequently, recycled aluminum is largely restricted to lower-grade applications, precluding its comprehensive substitution of primary aluminum. This article reviews the detrimental effects of Fe and the resulting Fe-rich phases (FRPs) on aluminum alloys, summarizes existing Fe removal and deterioration mitigation methods, and evaluates the industrial feasibility of these methods to provide comprehensive theoretical guidance for future FRP control technology. Moreover, this review provides guidance for resolving the impediments to the grade preservation and subsequent use of industrial recycled aluminum.